College is really expensive! While it’s one of the best investments you’ll make in your life, it’s also potentially one of the largest, and you have to find a way to pay for that investment when you’re barely eighteen years-old with hardly any credit history to speak of.
If you and/or your parents have bad credit scores, paying for college can seem like a real nightmare. After all, how are you going to qualify for an affordable student loan if you don’t have a good credit history? Well, fortunately, you have some bad credit student loans options.
Apply for Federal Student Aid
Federal student loans and grants aren’t awarded based on your credit score. Instead, they’re awarded entirely based on financial need. Furthermore, most students qualify for at least some federal funding assistance for their college careers. When you fill out and submit a FAFSA (Free Application for Federal Student Aid), your need will be assessed, and you’ll be informed about how much and what kind(s) of aid you qualify for.
If you display significant financial need, you could even qualify for a Pell grant or FSEOG (Federal Supplemental Education Opportunities Grant), either of which would award you money for college that you won’t have to pay back. Even if you don’t qualify for a grant, though, you will likely qualify for substantial student loans through the federal government.
Unfortunately, though, federally funded loans don’t always cover all of your tuition, housing, supplies, etc. In this case, you will have to seek private funding assistance, which can seem pretty hopeless if you have bad credit. However, there’s some bad credit student loans.
Parent PLUS Loans
PLUS loans are federal student loans that are usually reserved for graduate students but can also be awarded to parents of dependent undergrad students. If you are a dependent, you will likely not qualify for enough financial assistance to pay for your tuition and fees, but through a parent PLUS loan, your parents can usually fill up the gap for you.
Find a Cosigner With Good Credit for a Private Loan
If you’re not a dependent and your parents cannot qualify for a PLUS loan, you will likely have to find a private student loan to cover the rest of your tuition and other fees. For this, you’re going to need a cosigner, and most institutions will recommend asking one of your parents to cosign on your loan with you.
However, if your parents’ credit isn’t stellar, you don’t have to use either of them as your cosigner. Instead, talk to another family member or close friend about cosigning on your loan for you. Remember, when you do this, you are tying their credit score to your loan. This means, if you default on your loan, you will not only drag your credit score even farther down than it already is, but you’ll also be hurting their credit score, as well.
Fortunately, with a cosigner with good credit, your bad credit student loans will be much more likely to have decent interest rates. You may even be able to get a fixed interest rate loan with affordable payments that you can easily make each month. You may also be able to find a loan that will release your cosigner once you’ve made a certain number of consecutive on-time payments. Be sure to ask about this when you research your bad credit student loans and mention it to your cosigner, too, when you ask them to vouch for you.
Fixing Your Credit
If you can’t find someone to cosign on your loan, your only recourse is really to fix your credit score, which is actually a bit easier than it sounds. When they determine your credit score, credit bureaus look at your history for two basic things: longevity and diversity. Neither of these is very easy for a high school senior or college freshman to prove unless you use a few credit-fixing tricks:
- Have a line of open credit that’s paid in full every month (like an American Express card).
- Finance a car or make another purchase that involves installment credit. The regular monthly payments on this kind of loan will establish that you’re reliable over the long haul and will establish and build your credit.
- Carry a small balance from month to month on your Visa or Mastercard. This revolving credit will build the amount of credit you’re allowed with your credit card, and it will improve your credit score.
Through student loans, finding a cosigner, and/or working on your credit score, you can pay for your college education. Even students with bad credit can get student loans and make the greatest investment of their lives. By following these tips, you’ll find that gaining financial aid might not be as hard as you thought, even with less-than-perfect credit.
Compare and Apply for Student Loans TuitionChart.com
TuitionChart.com works hand-in-hand with the best, most trusted names in private student lending to help students and their families find the money they need for college. Through use of comparison tools and loan searches, TuitionChart provides over 20 different loan options for students. TuitionChart.com is designed to help students and their families wend their way through the maze of financial aid information.